Property Market Information: Federal Budget could impact new home construction

By the resi financial blog team, 16 May 2014

Cuts made as part of the 2014 Federal Budget could negatively affect the new home construction sector, according to the Housing Industry Association (HIA).

Following the budget announcement, HIA Chief Executive Graham Wolfe stated that it's important for the government to make the housing sector a priority.

"The residential building sector has only just begun to play a pivotal role in driving the economy as the nation transitions away from mining led growth," Mr Wolfe said in a May 13 media release.

"The recovery in new home building has been highly dependent on demand generated from the household sector."

However, Mr Wolfe feels that the budget doesn't give this industry the attention it deserves.

"The commitment to infrastructure investment and delivery in the budget is to be commended," Mr Wolfe continued.

"However, the extension of that investment to support the delivery of new housing is missing from the budget."

With that said, the latest data from the Australian Bureau of Statistics shows that lending for new home purchases and construction is on the rise, which bodes well for the industry as a whole.

During the March 2014 quarter, owner occupier lending increased 3.6 per cent while investor lending rose 4.9 per cent.

First home buyers also have something to smile about, as ABS figures show that the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments rose from 12.5 per cent in February to 12.6 per cent in March.

With interest rates currently hovering near all-time lows thanks to the low official cash rate, now may be the ideal time to obtain a first home loan. First-timer or not, borrowers should remember that finding the cheapest fixed-rate home loan means shopping around and working with lenders who understand your specific wants and needs